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The Important Role of Equivalence Scales: Household Size, Composition, and Poverty Dynamics in the Russian Federation

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  • Abanokova, Kseniya
  • Dang, Hai-Anh H.
  • Lokshin, Michael M.

Abstract

Hardly any literature exists on the relationship between equivalence scales and poverty dynamics for transitional countries. We offer a new study on the impacts of equivalence scale adjustments on poverty dynamics in the Russian Federation, using equivalence scales constructed from subjective wealth and more than 20 waves of household panel survey data from the Russia Longitudinal Monitoring Survey. The analysis suggests that the equivalence scale elasticity is sensitive to household demographic composition. The adjustments for the equivalence of scales result in lower estimates of poverty lines. We decompose poverty into chronic and transient components and find that chronic poverty is positively related to the adult scale parameter. However, chronic poverty is less sensitive to the child scale factor compared with the adult scale factor. Interestingly, the direction of income mobility might change depending on the specific scale parameters that are employed. The results are robust to different measures of chronic poverty, income expectations, reference groups, functional forms, and various other specifications.

Suggested Citation

  • Abanokova, Kseniya & Dang, Hai-Anh H. & Lokshin, Michael M., 2020. "The Important Role of Equivalence Scales: Household Size, Composition, and Poverty Dynamics in the Russian Federation," GLO Discussion Paper Series 568, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:568
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    Cited by:

    1. Steven F. Koch, 2021. "Equivalence Scales with Endogeneity and Base Independence," Working Papers 202185, University of Pretoria, Department of Economics.
    2. Pishnyak, A. & Khalina, N. & Nazarbaeva, E. & Goriainova, A., 2021. "The level and the profile of persistent poverty in Russia," Journal of the New Economic Association, New Economic Association, vol. 50(2), pages 56-73.

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    More about this item

    Keywords

    poverty; poverty dynamics; equivalence scale; Russia; panel survey;
    All these keywords.

    JEL classification:

    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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